First, let's review the current concern that is building in institutions like the UN's Food and Agriculture Organization (FAO) which has the primary task of providing early warnings about food shortages. Then we'll go on to say something about the fundamentals of this problem that is not easily going to disappear.
Jacques Diouf, the Director-General of FAO, has underlined with some simple facts the need for a new "Green Revolution" to provide food for hungry nations. There are a billion people on Planet Earth who go hungry right now. World food production will need to increase by 70 percent to feed a population of over nine billion people in 2050. With limited land, farmers will have to get greater yields out of the land already under cultivation. In a strikingly direct statement entitled "Price volatility and food shortages to remain" Mr Diouf says that the FAO Index of Food Prices rose again sharply at the end of 2010, heralding the possibility of another major food crisis. Coming from FAO, but with support from statements made by President Sarkozy of France recently about commodities prices and food riots and the US Government's "Feed the Future Initiative", this is not scaremongering.
FAO rightly identifies the underlying structural causes of the emerging crisis. As development professionals, we at FoodWorks absolutely support this analysis.
1. Falling investment in agriculture: the share of agriculture in official development assistance (ODA) dropped from 19% in 1980 to 3% in 2006, and now stands at around 5% - it should amount to $44 billion per year. ; the budgetary expenditure of low-income food-deficit countries on agriculture represents about 5%, when this should be at least 10%; finally, domestic and foreign private investments of around $140 billion per year should amount to $200 billion.
2. Unfair terms of trade for commodities: The OECD countries protect their agriculture with a total support estimate of $365 billion per year while encouraging through policy changes free, unsubsidised agriculture in the developing world. Non-tariff barriers also restrict trade.
3. Non-food industry speculation in agricultural commodities: there is considerable evidence that hedge funds and other, non industrial users of agricultural commodities take advantage of price upswings that drive the actual commodities to price levels that make their use as raw materials too costly. Not only do price surges take food directly from the mouths of the very poor, but they damage enterprise throughout the value chain, thus entrenching food shortages.
The blunt fact is that human population growth is leading to a Malthusian crisis in developing countries where the usual solution, technical change, cannot easily increase supply.
Tanzania is a good example: the population is growing at nearly 3% which means it will double from 40 million to 80 million in less than 30 years. But the agricultural base - good soil and available water - is limited. Climate change is compounding the problem with extended droughts. The necessary infrastructure, especially irrigation and farm-to-market roads, is lacking.
The awful irony is that this population increase is a result of rapid success in tackling basic health. Health projects (e.g. malaria net distribution) impact rapidly, whereas investments in agricultural productivity take many seasons to show their results. A recent assessment of agriculture in Tanzania conducted by FoodWorks shows that every aspect of the sector and the value chain needs to be tackled. But donors are increasingly reluctant to do so because of the difficulty of producing the easy to understand "success stories" so beloved of desk bound bureaucrats.
We believe that part of the answer will come from the private sector. Already large sovereign wealth funds and other commercial investors e.g. in the Gulf Arab States (the GCC) have begun to invest in agriculture to secure their own food supplies. FoodWorks has a number of plans afoot to help with this process. Equally, the large multi-national agribusiness companies need to be encouraged to make their products and R&D available to partners in the emerging but at-risk economies. USAID already has programs like its Global Development Alliance (GDA) in place and these kind of prgrams, combined with so-called "corporate social responsibility" (CSR) programs can lead to worthwhile public-private partnerships (PPP).
But there will not be any simple answer - and that's what confuses the bureaucrats. They don't understand that agriculture and agribusiness is possibly the most complicated human activity there is. It climate and biology-driven and includes elements of science, technology but also every angle of business, finance and marketing that can be imagined. Grow a crop, increase yields by all means, but if you can't ensure its quality and traceability (origin), store it, move it, package it and ensure that it's safe to eat and do that profitably, then the basic agronomy fails.
FoodWorks and its partners have over 40 years of experience in every aspect of this astonishingly complex activity. We want to be part of the solution. And a solution is urgently needed.
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Chart: UN FAO